The treasurer of Unisyms Company has accumulated the following budget information for the first two months of the coming year:

The company expects to sell about 35% of its merchandise for cash.Of sales on account,80% are expected to be collected in full in the month of the sale and the remainder in the month following the sale.One-fourth of the manufacturing costs are expected to be paid in the month in which they are incurred and the other three-fourths in the following month.Depreciation,insurance,and property taxes represent $6,400 of the probable monthly selling and administrative expenses.Insurance is paid in February,and a $40,000 installment on income taxes is expected to be paid in April.Of the remainder of the selling and administrative expenses,one-half are expected to be paid in the month in which they are incurred,with the balance paid in the following month.Capital additions of $250,000 are expected to be paid in March.
Current assets as of March 1 are composed of cash of $45,000 and accounts receivable of $51,000.Current liabilities as of March 1 are composed of accounts payable of $121,500 ($102,000 for materials purchases and $19,500 for operating expenses).Management desires to maintain a minimum cash balance of $20,000.
Prepare a monthly cash budget for March and April.

Question

The treasurer of Unisyms Company has accumulated the following budget information for the first two months of the coming year:
  
The company expects to sell about 35% of its merchandise for cash.Of sales on account,80% are expected to be collected in full in the month of the sale and the remainder in the month following the sale.One-fourth of the manufacturing costs are expected to be paid in the month in which they are incurred and the other three-fourths in the following month.Depreciation,insurance,and property taxes represent $6,400 of the probable monthly selling and administrative expenses.Insurance is paid in February,and a $40,000 installment on income taxes is expected to be paid in April.Of the remainder of the selling and administrative expenses,one-half are expected to be paid in the month in which they are incurred,with the balance paid in the following month.Capital additions of $250,000 are expected to be paid in March.
Current assets as of March 1 are composed of cash of $45,000 and accounts receivable of $51,000.Current liabilities as of March 1 are composed of accounts payable of $121,500 ($102,000 for materials purchases and $19,500 for operating expenses).Management desires to maintain a minimum cash balance of $20,000.
Prepare a monthly cash budget for March and April.

Quizplus · Accepted Answer

The Answer of The treasurer of Unisyms Company has accumulated the following budget information for the first two months of the coming year:
  
The company expects to sell about 35% of its merchandise for cash.Of sales on account,80% are expected to be collected in full in the month of the sale and the remainder in the month following the sale.One-fourth of the manufacturing costs are expected to be paid in the month in which they are incurred and the other three-fourths in the following month.Depreciation,insurance,and property taxes represent $6,400 of the probable monthly selling and administrative expenses.Insurance is paid in February,and a $40,000 installment on income taxes is expected to be paid in April.Of the remainder of the selling and administrative expenses,one-half are expected to be paid in the month in which they are incurred,with the balance paid in the following month.Capital additions of $250,000 are expected to be paid in March.
Current assets as of March 1 are composed of cash of $45,000 and accounts receivable of $51,000.Current liabilities as of March 1 are composed of accounts payable of $121,500 ($102,000 for materials purchases and $19,500 for operating expenses).Management desires to maintain a minimum cash balance of $20,000.
Prepare a monthly cash budget for March and April.

The Treasurer of Unisyms Company Has Accumulated the Following Budget